HP0613, LD 894, item 1, An Act Relating to Automatic Contract Renewals

An Act Relating to Automatic Contract Renewals

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 10 MRSA c. 229 is enacted to read:

CHAPTER 229

AUTOMATIC CONTRACT RENEWAL ACT

§ 1500-H. Short title

This chapter may be known and cited as "the Automatic Contract Renewal Act."

§ 1500-I. Definitions

As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.

1. Consumer. "Consumer" means an individual, business, corporation or other legal entity receiving products, services or repair under a contract.

2. Contract. "Contract" means a written agreement between 2 or more parties.

3. Parties. "Parties" includes individuals and other legal entities, but does not include the Federal Government, the State or another state, a unit of local government or a school district.

§ 1500-J. Automatic renewal; requirements

1. Automatic renewal. A person, firm, partnership, association or corporation that sells or offers to sell a product or service to a consumer pursuant to a contract that automatically renews unless the consumer cancels the account shall disclose the automatic renewal clause clearly and conspicuously in the contract, including the cancellation procedure. The automatic renewal clause must be printed in upper case letters, underscored and in bold print of a print size larger than the text of the rest of the contract.

2. Written notice. A person, firm, partnership, association or corporation that sells or offers to sell a product or service to a consumer pursuant to a contract that has a specified term of 12 months or more and that automatically renews for a specified term of more than one month unless the consumer cancels the contract shall notify the consumer in writing of the automatic renewal. Written notice under this subsection must be provided to the consumer no fewer than 30 days and no more than 60 days before the cancellation deadline pursuant to the automatic renewal clause and must disclose clearly and conspicuously:

A. That unless the consumer cancels the contract it will automatically renew; and

B. Where the consumer may obtain details regarding the automatic renewal provision and cancellation procedure.

§ 1500-K. Applicability

1. Financial institutions. This chapter does not apply to a bank, trust company, savings and loan association, savings bank or credit union licensed or organized under the laws of any state or the United States or to a foreign bank maintaining a branch or agency licensed or organized under the laws of any state or the United States or any subsidiary or affiliate.

2. Contract changes. This chapter does not apply to a contract that is extended beyond the original term of the contract as the result of a consumer's initiation of a change in the original contract terms.

Sec. 2. Application. This Act does not apply to a contract entered into before the effective date of this Act.

SUMMARY

This bill requires any entity who sells or provides services through an automatic renewal contract to disclose to the consumer the automatic renewal clause clearly and conspicuously in the contract, including the cancellation procedure. The bill also requires that written notice be provided to the consumer no fewer than 30 days and no more than 60 days before the cancellation deadline pursuant to the automatic renewal clause.

HP0613 LD 894	Session - 127th Maine Legislature		LR 1271 Item 1
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